US: All eyes on home price index and consumer confidence - Nomura

Research Team at Nomura, notes that the US Case-Shiller home price index declined in May by 0.05% following a revised decline of 0.18% m-o-m in April (previously reported as +0.45% m-o-m).

Key Quotes

“We believe some of the slowdown in recent months is likely due to imperfect seasonal adjustment procedures as the month-on-month change rate has shown more rapid appreciation in the winter but slower increases and declines in the spring/summer in recent years. On a year-over-year basis, the growth in home prices has slowed to 5.24%, falling below the previous near-term trend of around 5.5%. Consensus expects a 0.14% m-o-m decline in June, which would translate to a 5.1% increase on a year-over-year comparison.

Consumer Confidence: The Conference Board’s consumer confidence index was little changed in July, declining slightly to 97.3 from 97.4 as the increase in the present situation index offset the decline in the expectations index. Solid labor market performance in recent months plus cheaper gasoline prices and higher equity prices should help bolster consumer confidence. However, uncertainty surrounding the US election and worries over tepid economic growth prospects could weigh on confidence. On balance, we expect the negative outlook to outweigh the positive developments and forecast a 0.3 point decline to 97.0 in August.”